Brokers talk best, worst in Manhattan retail

Retail tenants looking for new locations ought to snap up space in and around the yet-
to-be-constructed World Trade Center shopping complex, while those trying to avoid
distress should stay away from stretches of the Upper East Side, brokers at a retail panel
said yesterday.

Lower Manhattan will be the next hot area as neighborhoods like the Meatpacking
District mature, panelist Karen Bellantoni, executive vice president at Robert K.
Futterman & Associates, predicted.

“My sense is what is coming next is the retail at the World Trade Center and surrounding
areas,” she said, because the retail complex there below the destroyed Twin Towers was
very strong, and now the area has more residential apartments.

Then, later, she identified neighborhoods that have fallen flat, pointing to First, Second
and Third avenues in the 60s and 70s.

“I am going to touch on fizzle. And a lot of people aren’t going to be happy about it,” she
said. “It’s great. There is convenience, there are banks. But beyond that the Upper East
Side heading east has fizzled.”

She made her comments on a panel yesterday covering store leasing in New York City. It
was the second of two back-to-back discussions hosted by publisher Bisnow in Midtown.
The first covered a national retail outlook.

In another neighborhood comparison, LaPierre said the city’s most expensive market,
Upper Fifth Avenue, was not seeing the same growth as its competitor, Times Square.

“Times Square has evolved into a different kind of market. Probably a faster growing
market,” he said.

Earlier that morning, the first panel covered national retail issues, from speakers Joseph
Sitt, CEO of developer Thor Equities; Adam Ifshin, president and CEO of landlord DLC
Management; and Tom Simmons, president of mid-Atlantic and northeast shopping
center regions at Kimco. The discussion was moderated by Richard Abramson, chairman

of the real estate department at law firm Cole Schatz.

While the discussion was generally positive about the market, Simmons said major
landlords were getting hit in two ways following the bankruptcies of three major-big box
retailers. They are receiving less in rent, and they have to invest money to build spaces
out for new tenants.

“Linens [& Things] average rent was far higher than Bed Bath [& Beyond]. Borders was
higher than Barnes [& Noble]. Circuit [City] was higher than Best Buy,” he said. “There
is the rent roll down and the retrofit costs are more significant.”

LaPierre touched on this issue in the local panel. He said the recent market was the
first time in his 17 years as a broker that he has seen owners pay for tenant build out.
Although common in office space, it is unusual to retail.

“You’ve got landlords that are more than amenable to putting money in,” he said, both to
attract tenants and to keep the face rents elevated.